Research >> Economics

University of Michigan Consumer Confidence increased in June to 85.5


Consumer sentiment rebounded in June to the second-highest level since the start of the pandemic, according to the University of Michigan Surveys of Consumers.

All of the June gain was among households with incomes above $100,000, and mainly in the way they judged the future economic outlook, said U-M economist Richard Curtin, director of the surveys.

Year-ahead inflation expectations fell slightly to 4.2% in June from May’s decade peak of 4.6%, and the expected recent price surges will be temporary, lasting until the economy stabilizes, he said.

Declines in unemployment rate in the year ahead were expected by 56% of consumers, the largest proportion recorded in the past half-century. The growing economic strength meant 73% of consumers expected rising interest rates in the year ahead—the highest proportion since 2018.

“When the shutdown of the economy occurred last year, consumers naturally expressed a good deal of uncertainty about their future job and income prospects,” Curtin said. “Since that April peak in uncertainty, consumers now hold much more positive job and income prospects, but not quite as favorable as in the last few years of the prior expansion.

“While many are optimistic about a gradual end to the pandemic, consumers still judged the risks from the emerging covid variants as appreciable. It is likely that consumers will not reduce their accumulated savings and reserve funds to their pre-pandemic levels, but maintain a higher level of precautionary funds.”
Widespread awareness of rising prices

Spontaneous references to high prices for homes, vehicles and household durables rose to their highest level since the all-time peak was set in November 1974 in the midst of a recession. These unfavorable perceptions of market prices reduced overall buying attitudes for vehicles and homes to their lowest point since 1982. The declines were especially sharp among households with incomes in the top third, who account for more than half of the dollar volume of retail sales.

Fortunately, offsetting a portion of the negative price effects, consumers have accumulated substantial increases in their savings balances as well as wealth, which will benefit overall spending, Curtin said.
Stronger economy expected

Consumers expect the economy to continue to gain strength in the year ahead, which prompted an all-time record number to expect continued declines in unemployment. Perhaps the best description of their expectations for the economy is a guarded optimism, Curtin said. This is especially true about the longer-term outlook for the economy, as the balance of opinion tilted in the June survey slightly toward a renewed downturn in the next five years.

Consumers anticipated that interest rates on borrowed funds will increase due to the stronger economy amid appreciable risks, although negative interest rates were still anticipated based on consumer’s inflation expectations.

Consumer Sentiment Index

The Consumer Sentiment Index rose to 85.5 in June 2021, up from 82.9 in May, but remained somewhat below the 88.3 in April. The Expectations component rose to 83.5 in June from 78.8 in May, the highest level since the expansion peak in February 2020. The Current Conditions Index fell slightly to 88.6 from 89.4 in May and well below April’s 97.2.

Although consumer sentiment slipped in late June, it still remained 3.1% above the May reading, and the second highest since the start of the pandemic. All of the June gain was among households with incomes above $100,000, and mainly in the way they judged future economic prospects. Consumers continued to pay close attention to three critical factors: inflation, unemployment, and interest rates. Not only did year-ahead inflation expectations fall slightly to 4.2% in June from May's decade peak of 4.6%, consumers also believed that the price surges will mostly be temporary. Declines in unemployment rate in the year ahead were expected by 56% of consumers, the largest proportion ever recorded in the history of the surveys. The growing strength in the economy meant that nearly three-quarters of all consumers expected rising interest rates during the year ahead, the highest proportion since 2018 when the economy was near its last peak. When the pandemic first started, consumers were quite uncertain about their job and income prospects, but reported widespread declines in market prices for homes, vehicles, and household durables (see the featured chart). Those favorable price references have dropped to the most negative in a decade, and job and income prospects have improved, but not quite as favorable as in the last few years of the prior expansion. While many are optimistic about a gradual end to the pandemic, consumers still judged the risks from emerging covid variants as appreciable. It is likely that consumers will not reduce their savings and wealth to pre-pandemic levels, but maintain a higher level of precautionary funds.




Posted: June 25, 2021 Friday 10:00 AM




Tags - Research
ADP EMPLOYMENT
BEIGE BOOK
BUSINESS BAROMETER
BUSINESS INVENTORIES
CASE-SHILLER
CEO CONFIDENCE
CHALLENGER LAYOFFS
CHICAGO FED MIDWEST MFG
CHICAGO FED NATL ACTIVITY
CHICAGO PMI
CONSTRUCTION SPENDING
CONSUMER CONFIDENCE
CONSUMER CREDIT
CPI
CURRENT ACCOUNT
DURABLE GOODS
EMPLOYMENT COST INDEX
EMPLOYMENT TRENDS INDEX
EXISTING HOME SALES
FACTORY ORDERS
FOMC STMT
FOMC
GDP
HELP WANTED HWOL
HOUSING STARTS
ICSC CHAIN STORE
IMPORT PRICE INDEX
INDUSTRIAL PRODUCTION
INTERNATIONAL TRADE
ISM MFG
ISM NON-MFG
JOB OPENINGS
JOBLESS CLAIMS
KANSAS CITY FED MFG
LEADING INDEX
MASS LAYOFFS
MICH CONSUMER CONFIDENCE
MORTGAGE APPS
NAHB INDEX
NAPM-NY
NBER
NEW HOME SALES
NEW YORK FED MFG
NFIB OPTIMISM INDEX
NONFARM EMPLOYMENT
PAYCHEX-IHS SMALL JOBS
PENDING HOME SALES
PERSONAL INCOME
PHILA FED FORECASTERS
PHILA FED MFG
PHILA FED NON-MFG
PPI
PRODUCTIVITY GROWTH
REAL HOURLY EARNINGS
RETAIL SALES
RICHMOND FED MFG
TEXAS FED MFG
TREASURY INTL CAPITAL
WHOLESALE INVENTORIES
Archives
Mar 2024
Feb 2024
Jan 2024
Dec 2023
Nov 2023
Oct 2023
Sep 2023
Aug 2023
Jul 2023
Jun 2023
May 2023
Apr 2023
Mar 2023
Feb 2023
Jan 2023
Dec 2022
Nov 2022
Oct 2022
Sep 2022
Aug 2022
Jul 2022
Jun 2022
May 2022
Apr 2022
Mar 2022
Feb 2022
Jan 2022
Dec 2021
Nov 2021
Oct 2021
Sep 2021
Aug 2021
Jul 2021
Jun 2021
May 2021
Apr 2021
Mar 2021
Feb 2021
Jan 2021
Dec 2020
Nov 2020
Oct 2020
Sep 2020
Aug 2020
Jul 2020
Jun 2020
May 2020
Apr 2020
Mar 2020
Feb 2020
Jan 2020
Dec 2019
Nov 2019
Oct 2019
Sep 2019
Aug 2019
Jul 2019
Jun 2019
May 2019
Apr 2019
Mar 2019
Feb 2019
Jan 2019
Dec 2018
Nov 2018
Oct 2018
Sep 2018
Aug 2018
Jul 2018
Jun 2018
May 2018
Apr 2018
Mar 2018
Feb 2018
Jan 2018
Dec 2017
Nov 2017
Oct 2017
Sep 2017
Aug 2017
Jul 2017
Jun 2017
May 2017
Apr 2017
Mar 2017
Feb 2017
Jan 2017
Dec 2016
Nov 2016
Oct 2016
Sep 2016
Aug 2016
Jul 2016
Jun 2016
May 2016
Apr 2016
Mar 2016
Feb 2016
Jan 2016
Dec 2015
Nov 2015
Oct 2015
Sep 2015
Aug 2015
Jul 2015
Jun 2015
May 2015
Apr 2015
Mar 2015
Feb 2015
Jan 2015
Dec 2014
Nov 2014
Oct 2014
Sep 2014
Aug 2014
Jul 2014
Jun 2014
May 2014
Apr 2014
Mar 2014
Feb 2014
Jan 2014
Dec 2013
Nov 2013
Oct 2013
Sep 2013
Aug 2013
Jul 2013
Jun 2013
May 2013
Apr 2013
Mar 2013
Feb 2013
Jan 2013
Dec 2012
Nov 2012
Oct 2012
Sep 2012
Aug 2012
Jul 2012
Jun 2012
May 2012
Apr 2012
Mar 2012
Feb 2012
Jan 2012
Dec 2011
Nov 2011
Oct 2011
Sep 2011
Aug 2011
Jul 2011
Jun 2011
May 2011
Apr 2011
Mar 2011
Feb 2011
Jan 2011
Dec 2010
Nov 2010
Oct 2010
Sep 2010
Aug 2010
Jul 2010
Jun 2010
May 2010
Apr 2010
Mar 2010
Feb 2010
Jan 2010
Dec 2009
Nov 2009
Oct 2009
Sep 2009
Aug 2009
Jul 2009
Jun 2009
May 2009
Apr 2009
Mar 2009
Feb 2009
Jan 2009
Dec 2008
Nov 2008
Oct 2008
Sep 2008
Aug 2008






National Association for Business Economics
NABE

Founded in 1920, the National Bureau of Economic Research is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works.

CFA Institute

Quick Links
Barron's Online
Bloomberg
CNBC
CNBC TV Live
CNet Investor
Financial Times (UK)
Forbes
Kudlow Podcast
MSNBC TV Live
NBC News
NY Times
The Economist
TheStreet.com
Wall St Journal
Dismal Scientist
Dr. Ed Yardeni
FRED Graph
Lawrence Kudlow
GDPNow
NABE
ABC News
CNNfn
Institutional Investor
MarketWatch
Cash Prices - WSJ.com
Dollar Index
Dr. Jeremy Siegel
Market Map
NY RBOB Gas
PriceStats
Rig Count
Shadow Fed - SOMC
The Billion Prices Project
BankStocks.com
Dow Jones Indices
Morningstar
SP Indices
Mt Washington Observatory
Weather.com
Yahoo!!